1. Is an EIN Number Confidential
2. Are They Protected?
3. What the IRS Recommends

Is an EIN Number Confidential

“Is an EIN number confidential,” is a typical question that a business owner might want to know before obtaining a business identification number. An EIN, also referred to an Employer Identification Number, is issued by the Internal Revenue Service (IRS). This is essentially a business social security number used for tax purposes.

It is simple to obtain an EIN; you can visit the IRS website and obtain your EIN immediately after submitting an online application. Thereafter, you will use the EIN to submit your taxes. Note that not all businesses need EINs. A sole proprietor can use his personal SSN rather than obtain an EIN. Furthermore, a partnership or LLC with no employees need not obtain an EIN. However, once the business hires employees, they must obtain one. Furthermore, corporations must always obtain an EIN.

Are They Protected?

No, EINs are not kept confidential and are a matter of public record. Therefore, it is important that you keep your EIN safe and secure to ensure that no one attempts to commit fraud by using your EIN. In order to do this, there are several steps that you can take to protect your business in the same way that you would protect your personal information from identity theft.

Such protections include the following:

  • Develop a plan.
  • Use prepaid business credit cards.
  • Monitor your company’s credit.
  • Avoid having a master user.

You can develop a plan that identifies how to keep your business’s identify protected, and what steps you should take if any confidential or open-source business information is compromised. Next, you want to protect your documents. As previously noted, in the same way that you would protect your own identity, you will want to do the same for your business.

Keep all confidential business information in a safe location, i.e., locked drawers and officers. If you need to trash documents, you should shred them instead of throwing them in the trashcan. Use only online reputable websites when entering your EIN. Even though the business EIN isn’t confidential, you should still only provide it online if the website is secure.

You should use pre-paid business credit cards, particularly for your employees. Instead of using a corporate card, the pre-paid cards will provide enhanced protection to control the amount of money spent by employees. This will be especially helpful in preventing internal theft and fraud from employees.

Next, you want to ensure that you are constantly monitoring your company’s credit. Look on all three credit bureau websites to keep track of the reports and submit complaints about any questionable marks. You can also receive alerts for suspicious activity or changes to your credit report.

Lastly, you should avoid having a master user, which is the use of one login and one password. This can cause a host of concerns, including internal and external fraud, i.e., potential phishing, pharming, account takeover, internal theft, etc.

What the IRS Recommends

According to the IRS website, there are approximately 3,000 employees who work on potential tax fraud matters. In addition, there are 35,000 professionals working for businesses in a fraud investigative capacity. This number will continue to increase as fraudulent perpetrators are finding more creative ways to engage in fraud; in fact, it can be very difficult to catch certain fraudulent activities, particularly if the fraud involves the cloud computing environment.

The IRS works closely with various law enforcement agencies to identify potential theft and work on new resolutions for catching such activity. They also work very closely with a company called the Identity Theft Clearinghouse; this company refers all cases to the IRS criminal investigative field office for an additional review.

To date, there are more than 391,000 fraudulent tax returns that have been identified totaling approximately $1.3 billion. This means that countless perpetrators are consistently committing identity theft and tax fraud.

With these aforementioned steps, you can help protect you and your business from internal and external theft. Creating a detailed approach and plan on how to respond to such irregularities will only help your business in the long run.

If you need help learning more about whether an EIN number is confidential, and how to obtain an EIN, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.